The annual increase in Social Security checks thanks to COLA makes it easier for United States retirees to fight inflation. This increase in retirement payments helps retirees maintain their purchasing power. Ultimately, the goal of the COLA is not for retirees to have more money, but for them to have the same amount so that they can continue to pay all of their expenses.
This is the main objective of the COLA and not to make retirees have more money each new year, as many citizens think. The COLA does not act on the Social Security amount to make retirees wealthy, but to keep them at the same standard of living or at least as close to it as possible.
While this is true, sometimes the COLA can be insufficient for many retirees. Still, receiving a raise every year is always good news, as it allows Americans to be able to continue their lives by collecting the Social Security benefit.
For this year 2023 we have had a record COLA reaching an 8.7% increase, which has brought the maximum Social Security check to $4,555 per month. Still, many experts talk about this being insufficient to be able to afford the costs of the last few years.
How much will Social Security increase through the COLA in 2024?
Although it is still early to determine an exact figure, some experts talk that the COLA will not be as large as in the previous year. Inflation has stagnated somewhat and does not appear to be as aggressive as in 2022. However, there is still a steady increase in prices that will result in retirees having less purchasing power in the coming year.
Regarding the cost-of-living adjustment (COLA), it appears that we could potentially see an increase ranging from 3% to 5%. This would result in a significant raise in the amount received in checks. However, the actual increase hinges on the inflation rates observed during the months of July, August, and September. The annual adjustment in Social Security benefits is determined by calculating the average inflation rate for these months. Therefore, we will need to exercise patience and monitor the price increases beginning next month in order to gauge the final outcome.
When will the new COLA for 2024 be announced?
The COLA is calculated, as we have already mentioned, from the tax increases for the months of July, August and September. After the study of those months the United States Federal Government announces the COLA in the month of October. There is no exact date yet, but that is the month chosen to announce this check increase.
Therefore, as of today, we can only hope and expect that the increase in pensions will be sufficient. It may be, but there are times when the COLA does not match the actual increase in inflation.
The biggest problem with respect to this is that inflation follows after the COLA is announced. So from the time the Federal Government says how much they will increase benefits until they actually see that increase the increase in prices has continued to rise.